Fresh selling pressure and no support emerging at lower levels amidst heavy capital outflows from foreign funds on fears of rise in interest rates pulled down the BSE benchmark Sensex by 817 points or four per cent during the week under review. A dent in the confidence of investors across-the-board led to heavy sell with no support emerging at lower levels. Banking stocks declined on fears of hurting profitability in view that higher deposit rates may impact bank's net interest margins. Auto and realty stocks slumped on worries over highest interest rates as higher prices may affect demand. Rather than overseas problems,local crisis weighed on the market sentiment,brokers said. Food inflation rose sharply to 18.32 per cent for the week ended December 25 from 14.44 per cent a week ago,that may prompt the Reserve Bank of India to tighten monetary policy on January 25 to check further escalation in commodity costs. Current account deficit,recent scams and a sharp rise in food inflation,may lead the apex bank to hike in key interest rates in its monetary policy review on January 25 to contain rising inflation,mainly took the shine of the market. The Bombay Stock Exchange 30-share bellwether index fell sharply by 817.28 points or 3.98 per cent to end at 19,691.81 from its last weekend's level of 20,509.09.
